The Goods and Services Tax (GST) system in India, introduced in 2017, brought about a monumental shift in the country’s indirect tax landscape. While it aimed at consolidating multiple indirect taxes into a single tax structure, the transition was not without complications. During the initial years, numerous taxpayers encountered compliance challenges, resulting in disputes, delayed payments, and inadvertent errors. These issues, accumulated over time, have led to extensive litigation, burdening both the tax administration and businesses.
To address these legacy disputes and facilitate voluntary compliance, the government has introduced a one-time settlement window under the GST Amnesty Scheme 2024. This scheme is designed to offer a clean break from the past by waiving off interest and penalties in specific cases, subject to certain conditions. The legislative foundation of this scheme is laid down in Section 128A of the Central Goods and Services Tax Act, 2017.
Introduction to the GST Amnesty Scheme 2024
The GST Amnesty Scheme 2024 was proposed in the 53rd GST Council meeting and has since been legislated through the Finance Act, 2024. This scheme is centered around the introduction of Section 128A into the CGST Act, 2017. It offers relief to taxpayers who have received notices or orders for non-payment or short payment of GST but have not yet undergone full adjudication or appellate review.
This amnesty is available for demands falling under the ambit of Section 73 of the CGST Act, which covers non-fraudulent cases of tax non-compliance. The scheme specifically applies to disputes for the financial years 2017–18, 2018–19, and 2019–20, recognizing that these initial years of GST implementation posed serious challenges for businesses, especially small and medium enterprises.
Statutory Provision: Insertion of Section 128A
Section 128A has been inserted into the CGST Act by Section 146 of the Finance Act, 2024. It comes into effect from 1st November 2024. This section grants the power to waive interest and penalty in cases where tax demands are raised under Section 73. Section 73 deals with cases where tax was not paid or short paid without any fraudulent intent or suppression of facts.
The provision is aimed at encouraging taxpayers to come forward and settle their tax dues by making the full payment of the principal amount of tax. In return, they can benefit from complete waiver of interest and penalty that would have otherwise been levied under the CGST Act. This not only helps businesses regularize their tax status but also helps the government resolve a significant volume of pending litigation.
Applicability of the Scheme: Financial Years Covered
The scheme has a limited retrospective scope. It applies only to the following financial years:
- Financial Year 2017–18
- Financial Year 2018–19
- Financial Year 2019–20
These years represent the early phase of GST roll-out when businesses were still adapting to the new system. Given the complexities and teething issues of the period, this window offers taxpayers an opportunity to correct past mistakes without enduring the burden of accumulated penalties and interest.
Recommendations of the 54th GST Council Meeting
To ensure the effective implementation of the scheme, the 54th GST Council meeting proposed amendments to the CGST Rules. These were later formalized through Notifications dated 8th October 2024. Two key notifications have been issued:
- Notification No. 20/2024 introduces Rule 164 in the CGST Rules, effective from 1st November 2024. This Rule lays down the detailed procedural steps for availing the benefits under Section 128A.
- Notification No. 21/2024 prescribes the deadline for full tax payment under the scheme. The entire amount of tax due must be paid on or before 31st March 2025 to be eligible for waiver of interest and penalty.
These notifications bring in the procedural clarity needed to implement Section 128A efficiently, ensuring uniformity and certainty in its application across jurisdictions.
Categorization of Eligible Cases under Section 128A
Section 128A identifies three specific categories of cases where taxpayers are eligible to apply under the scheme. These are detailed under clauses (a), (b), and (c) of subsection (1) of Section 128A.
Section 128A(1)(a): Notice Issued but No Final Order Passed
This sub-clause covers cases where a notice under Section 73 has been issued to the taxpayer but the final adjudication order under Section 73(9) has not yet been passed. In such cases, the taxpayer can pay the tax amount as mentioned in the notice and file an application in Form GST SPL-01.
This provision ensures that taxpayers can resolve their disputes at the pre-adjudication stage itself, saving time and administrative effort for both parties.
Section 128A(1)(b): Order Passed but No Appeal or Revision Initiated
This clause applies to cases where a proper officer has already passed an adjudication order under Section 73, but the taxpayer has not filed an appeal under Section 107 or revision under Section 108. For such cases, the application has to be filed in Form GST SPL-02.
This category enables taxpayers who may have accepted the adjudication order or have missed the appeal window to close the matter by simply paying the tax amount and availing of waiver for interest and penalty.
Section 128A(1)(c): Appellate Order Passed but No Tribunal Appeal Filed
If the taxpayer has already filed an appeal and received an appellate order under Section 107 or 108, but has not filed a further appeal before the Appellate Tribunal, they can still avail themselves of the amnesty by submitting Form GST SPL-02.
This provision broadens the scope of the scheme to include cases that have undergone the first level of appellate scrutiny but are still pending finality. It gives taxpayers a chance to exit prolonged litigation by foregoing further appeals in exchange for closure with reduced liability.
Clarifications through Circular No. 238/32/2024
To clarify the operational aspects of Section 128A, Circular No. 238/32/2024 was issued on 15th October 2024. This circular addresses certain special scenarios where the eligibility of the taxpayer may be questioned due to the procedural status of the case.
Clarified Scenarios
- Cases where a notice or statement under Section 73(1) or 73(3) has been issued, but the final order under Section 73(9) is still pending, are eligible for application under the scheme.
- Situations where an order has already been passed under Section 73(9), but the taxpayer has not proceeded to file an appeal or seek revision, are also covered under the scheme.
- In cases where the initial notice was issued under Section 74, which deals with fraud or suppression, but the authority subsequently directs the case to be adjudicated under Section 73 as per Section 75(2), the taxpayer becomes eligible under Section 128A.
These clarifications aim to eliminate confusion and provide administrative guidance to officers and taxpayers alike. The circular helps ensure that no genuine taxpayer is denied relief due to procedural ambiguities.
Restrictions and Special Conditions
While the scheme offers significant relief, it comes with certain restrictions and conditions that need to be strictly adhered to.
Reclassification of Section 74 Notices
Where the demand was originally issued under Section 74 but later directed to be treated under Section 73 due to the absence of intent to evade tax, the application must be filed within six months from the date the tax is determined by the proper officer. This timeline ensures that such reclassified cases are brought to a logical conclusion promptly.
Exclusion of Cases Involving Erroneous Refunds
As per Section 128A(2), the scheme is not applicable to cases involving erroneous or excessive refunds. This ensures that the scheme remains confined to non-payment or short payment of tax and does not extend to cases where money has already been wrongly disbursed from the exchequer.
Requirement to Withdraw Appeals and Writ Petitions
Section 128A(3) makes it mandatory for the taxpayer to withdraw any pending appeal under Section 107 or 108, or any writ petition filed before a court, before applying under the amnesty scheme. Only after such withdrawal can the taxpayer proceed to file an application under SPL-01 or SPL-02.
The withdrawal must be supported by a copy of the withdrawal application or the final order, which must be uploaded on the portal within one month of receipt. This requirement prevents dual proceedings and ensures that the taxpayer is committed to settling the dispute conclusively under the scheme.
Introduction of Rule 164 to CGST Rules
The procedural machinery for implementing the GST Amnesty Scheme 2024 has been established by the insertion of Rule 164 into the CGST Rules. This new rule provides the operational framework for applying for waiver of interest and penalty on eligible tax dues.
Rule 164, effective from 1st November 2024, governs the forms to be filed, the officers responsible, processing timelines, communication protocols, and the deemed approval mechanism. This is a critical part of the overall scheme, ensuring that taxpayers are aware of their responsibilities and timelines, and that GST officers are equipped with a streamlined workflow for handling applications.
Notifications Enabling Rule 164
Two notifications are central to the application of Rule 164:
- Notification No. 20/2024 dated 08.10.2024: This inserted Rule 164 in the CGST Rules.
- Notification No. 21/2024 dated 08.10.2024: This requires full payment of admitted tax dues by 31st March 2025 in order to avail the scheme’s benefits.
These notifications collectively mandate both the substantive and procedural obligations upon taxpayers seeking relief under Section 128A.
Eligibility Conditions and Clarified Scenarios
Section 128A(1)(a): Notice Issued but No Final Order
Taxpayers who have received a notice under Section 73, but for whom no final adjudication order has been passed as of 1st November 2024, fall under this category. In such cases, the taxpayer is eligible to file Form GST SPL-01 after discharging the full tax liability mentioned in the notice or statement.
The GST Council and CBIC have clarified that even if the notice was issued under Section 74, but subsequently recharacterised as a Section 73 case (as per Section 75(2)), the case will still qualify, provided no final order is passed.
Section 128A(1)(b): Order Passed, No Appeal or Revision
Taxpayers against whom an adjudication order has already been passed under Section 73, but neither an appeal nor a revision order has been passed under Sections 107 or 108, may apply using Form GST SPL-02. These taxpayers are eligible to seek waiver of interest and penalty after clearing the tax dues as determined in the order.
Section 128A(1)(c): Appellate Orders with No Tribunal Order
Where the first appellate authority or revisional authority has already passed an order under Section 107 or 108 respectively, but no Appellate Tribunal order has been passed, the taxpayer can also apply using Form GST SPL-02. Here too, payment of the full tax amount is a prerequisite.
Clarifications Through Circular No. 238/32/2024
Applicability of the Scheme to Transitional Cases
Circular No. 238/32/2024-GST, dated 15.10.2024, plays an essential role in offering clarifications for a variety of nuanced circumstances that may have otherwise led to interpretational disputes. These include:
- Situations where a notice or statement has been issued under Section 73(1) or 73(3), but final adjudication under Section 73(9) has not occurred.
- Instances where adjudication has concluded under Section 73(9), but appellate or revision proceedings are pending or have not commenced.
- Cases where a Section 74 notice was reassessed as a Section 73 case under the direction of appellate authorities or as per the deeming provision in Section 75(2).
These clarifications ensure that transitional proceedings or classification-based confusion do not disqualify genuine cases from availing the benefits of the amnesty.
Special Provision: Six-Month Filing Window
Where an appellate authority has directed reassessment of demands initially raised under Section 74 as falling under Section 73, the scheme allows the taxpayer to file the SPL-02 application within six months of the appellate order. This exception recognizes the procedural delay that may arise in such redirected adjudications.
Inapplicability and Legal Restrictions
Erroneous Refund Cases
The amnesty scheme is not available in cases where demand arises due to erroneous or excess refunds. Section 128A(2) specifically excludes such cases, as these pertain to revenue recovery and not tax evasion or delayed compliance.
Pending Appeals or Writ Petitions
Taxpayers involved in ongoing appellate or writ proceedings related to the same tax dues must withdraw such cases before availing of the amnesty. Section 128A(3) mandates that no relief shall be granted under the scheme unless the taxpayer relinquishes other legal remedies for the same issue. This condition reinforces the idea of finality and settlement, a key goal of the scheme.
Filing Process: Forms and Timeline
Form SPL-01: Application for Pending Notices
Where only a notice or statement has been issued and no order passed, the taxpayer should file Form GST SPL-01. The application can be submitted only after making full tax payment, and should be filed within three months from 31st March 2025. This effectively gives taxpayers time till 30th June 2025 to file the application.
Form SPL-02: Application for Decided Matters
Taxpayers under Section 128A(1)(b) or (c), where orders have been passed, should use Form GST SPL-02. For reassessed Section 74 matters reclassified under Section 73 by appellate authorities, this form is also applicable, and must be filed within six months of the date of the appellate order.
Withdrawal of Legal Proceedings
Step-by-Step Process
Before filing either Form SPL-01 or SPL-02, the taxpayer must withdraw any pending appeals, revisions, or writ petitions related to the matter. The steps are:
- File the application for withdrawal of the pending case.
- Attach a copy of this application with SPL-01 or SPL-02.
- Submit the final withdrawal order within one month of its receipt.
This requirement ensures there is no dual litigation and the matter is conclusively resolved through the amnesty.
Tax Payment Modes
For SPL-01: DRC-03 Payment
Where a case falls under Section 128A(1)(a), meaning the matter is still at the notice stage, tax should be paid using Form DRC-03. The taxpayer should ensure that the correct tax amount, as stated in the notice or statement, is discharged through voluntary payment.
For SPL-02: ELR Debit
For matters under Section 128A(1)(b) and (c), where an order has been passed, payment should be made by debiting the Electronic Liability Register (ELR). If payment was already made using DRC-03 before this clarification, Rule 142(2B) must be followed to regularise the payment appropriately.
Circular No. 224/18/2024-GST dated 11.07.2024 addresses the protocol for cases where tax is paid voluntarily via DRC-03 and later adjustment is required under this scheme.
Implications on Input Tax Credit
Addressing Disallowance under Section 16(4)
Where tax demand originated due to denial of Input Tax Credit (ITC), the scheme allows taxpayers to rectify their position, provided the credit is now available. No separate application for rectification is required if the deduction pertains to ineligible credit under Section 16(4). This provision gives relief to businesses that were earlier penalised for delayed compliance with ITC time limits.
No Re-Opening of Eligibility
However, the scheme does not permit a full reevaluation of ITC eligibility. Only those credits disallowed strictly under the time-bound provision of Section 16(4) can be adjusted. Other disallowances arising from mismatch, documentation issues, or non-compliance will not be reopened under the scheme.
Filing of Forms GST SPL-01 and SPL-02
The GST Amnesty Scheme 2024 sets out a structured process for taxpayers to avail the benefits through specific forms, namely SPL-01 and SPL-02. The eligibility conditions for using each form stem from the status of the taxpayer’s case as laid out under Section 128A(1) of the Central Goods and Services Tax Act, 2017.
Form SPL-01 is applicable in scenarios where a notice under Section 73 has been issued but no final order is passed under Section 73(9). In such cases, the taxpayer can voluntarily opt into the scheme by making full payment of the tax due and submitting the application in SPL-01.
Form SPL-02 is used in two cases. First, when a final order has already been passed under Section 73(9), but no appeal or revision order has been passed under Sections 107 or 108. Second, when an appellate or revisional order has been passed but no order of the Appellate Tribunal has been issued.
Applications under both forms must be submitted within a prescribed time frame. The taxpayer is required to make full payment of the tax demand on or before 31st March 2025. Following this, the application must be filed within a period of three months from the due date for payment, i.e., by 30th June 2025.
Where a notice originally issued under Section 74 is later reclassified as a Section 73 proceeding by the appellate or revisional authority, the taxpayer must file Form SPL-02 within six months from the date of communication of such reclassification order.
Pre-Filing Requirement: Withdrawal of Appeal or Writ Petition
Before filing an application under the GST Amnesty Scheme 2024, taxpayers must ensure that there are no pending appeals, revisions, or writ petitions before any authority or court in relation to the disputed tax demand.
Section 128A(3) requires that all such proceedings be formally withdrawn. Along with the application form, taxpayers must attach either:
- The order of withdrawal, or
- A copy of the application made for withdrawal, if the withdrawal order is not yet received.
In case the withdrawal order is not submitted at the time of application, it must be uploaded on the GST portal within one month from its receipt. This condition is mandatory for the application to be processed successfully under the scheme.
This ensures that a taxpayer cannot simultaneously avail amnesty and continue to pursue litigation, thereby preventing dual remedies and ensuring the finality of proceedings under the amnesty route.
Mode of Payment of Tax and Electronic Liability Adjustments
The mode of tax payment under the GST Amnesty Scheme varies depending on the nature of the case.
For taxpayers falling under Section 128A(1)(a), where the notice is issued but no order is passed, payment must be made through Form DRC-03. This is a voluntary payment form used for self-assessment or payment of tax liability pursuant to a show cause notice.
In cases under Section 128A(1)(b) and (c), where a final adjudication or appellate order has already been passed, payment is to be made by debiting the Electronic Liability Register. This is facilitated directly through the GST portal, allowing the proper accounting of tax dues against the existing demand.
A special clarification was issued via Circular No. 224/18/2024-GST dated 11.07.2024, addressing situations where payment has already been made through Form DRC-03. In such cases, the procedure under Rule 142(2B) of the CGST Rules must be followed to ensure that proper linkage of payments is maintained and no duplication or confusion arises during application scrutiny.
Input Tax Credit Denial and Adjustments under Section 16(4)
A significant number of demands raised under GST proceedings pertain to denial of input tax credit. The GST Amnesty Scheme provides certain relief mechanisms in such scenarios, especially where the ineligibility of input tax credit is based on time-barred claims under Section 16(4).
In cases where input tax credit was previously disallowed but is now found to be eligible or allowable due to updated compliance or rectification, the taxpayer need not file a separate rectification application. However, only credit ineligible under Section 16(4) can be claimed back in this context.
It must be ensured that the demand is not linked to fraudulent claims or ineligible credits under other provisions. The taxpayer should be cautious while availing benefits under the amnesty scheme in such cases, and professional advice may be necessary to avoid complications during audit or scrutiny.
Processing of Applications and Issuance of Orders
Once a taxpayer files Form SPL-01 or SPL-02, the application is processed by the proper officer, who holds jurisdiction over the relevant case. For SPL-01, the officer under Section 73 of the CGST Act processes the application. For SPL-02, the proper officer is designated under Section 79.
If the officer finds grounds for rejection, a show cause notice in Form SPL-03 is issued. The taxpayer is provided an opportunity to respond through Form SPL-04. A personal hearing is mandatorily granted before final adjudication.
Depending on the outcome, the following orders are passed:
- Form SPL-05 is issued if the application is accepted. This order confirms acceptance and provides closure to the proceedings.
- Form SPL-07 is issued if the application is rejected. The rejection order outlines the reasons and the taxpayer’s right to appeal.
A key procedural safeguard is embedded in Rule 164(13), which provides that if no order is issued within the prescribed period after submission of the application, the application is deemed accepted. In such cases, SPL-05 is auto-generated on the portal.
Where Form SPL-01 is accepted, there is no requirement for issuance of a demand summary in DRC-07. For SPL-02, the Electronic Liability Register is automatically updated to reflect the final adjustment and closure.
Appeal Provisions Against Rejection Orders (SPL-07)
A taxpayer whose application is rejected under the GST Amnesty Scheme 2024 can challenge the decision by filing an appeal. Such appeals can be made under Section 107 of the CGST Act by submitting Form APL-01.
However, appeals are restricted only to the issue of waiver of interest and penalty. The merits of the underlying tax liability cannot be re-agitated in such appeals, as the taxpayer has already accepted the tax dues under the scheme.
While the scheme provides that no pre-deposit is generally required for filing an appeal, in cases where the taxpayer has not paid the minimum pre-deposit amount as per standard appellate procedures, the differential amount must be deposited before proceeding with the appeal.
If the appeal is successful, the appellate authority passes Form SPL-06, accepting the taxpayer’s claim and granting the benefits of the scheme. If the appeal is dismissed and SPL-07 is upheld, a further order in Form APL-04 is issued, conclusively rejecting the claim.
Once the appeal authority allows the taxpayer’s claim and issues SPL-06, the order becomes final, and no further appeal is permitted against such acceptance. This ensures a closure mechanism for taxpayers as well as the tax administration.
In case no appeal is filed against SPL-07 within the statutory limitation period, the original appeal or writ petition (if earlier withdrawn) is deemed restored, provided the taxpayer satisfies the procedural requirements.
Automation and Time-Bound Processing
One of the significant improvements under the GST Amnesty Scheme 2024 is the emphasis on automation. With defined time limits for application processing, the system ensures faster resolution. The auto-generation of SPL-05 in the absence of an order within the prescribed timeline guarantees certainty to taxpayers.
This framework not only reduces administrative burden but also prevents procedural delays that often act as a deterrent to taxpayers seeking redressal under earlier amnesty or settlement schemes.
Restoration of Original Appeal After Rejection
If an application under the scheme is rejected and no appeal is filed against SPL-07, the taxpayer can seek restoration of the original appeal or writ petition withdrawn earlier. This is done by submitting Form SPL-08, which serves as an undertaking to not pursue further amnesty benefits.
Upon such restoration, the original appellate or judicial process continues from where it was left off. However, this provision cannot be used to keep the amnesty and litigation options open simultaneously. It is intended to offer a fallback mechanism only for genuine cases where relief under the scheme could not be availed.
Conclusion
The GST Amnesty Scheme 2024, anchored in the newly introduced Section 128A of the CGST Act, represents a progressive and remedial approach towards resolving pending GST disputes and easing the compliance burden on taxpayers. By enabling waiver of interest and penalties in cases initiated under Section 73 for the initial financial years of GST implementation, the scheme acknowledges the transitional challenges faced by businesses during the early phases of the indirect tax regime.
This initiative is not just a legal measure but a strategic policy move to unclog the judicial pipeline, reduce litigation, and promote voluntary tax compliance. Through well-defined forms, timelines, and procedures, including the introduction of Forms SPL-01 and SPL-02, the scheme ensures a structured pathway for eligible taxpayers to resolve their outstanding tax dues. The mandatory withdrawal of appeals or writs before applying under the scheme ensures procedural clarity and avoids parallel proceedings.
The issuance of Rule 164 and the detailed operational framework through circulars and notifications reinforce the government’s commitment to simplifying tax compliance. Notably, the scheme clearly outlines eligibility and ineligibility conditions, allowing taxpayers to make informed decisions. It also addresses specific procedural issues such as the payment modes, deemed approvals, adjustment of ineligible input tax credit, and application timelines.
By placing limits on appellate rights post-SPL orders and granting deemed acceptance in cases where the department fails to act within prescribed time limits, the scheme fosters accountability and reduces taxpayer uncertainty. Moreover, the specific provisions dealing with cases transitioning from Section 74 to Section 73, along with mechanisms for withdrawing existing litigation, offer tailored solutions to nuanced real-world scenarios.
However, taxpayers must act promptly, as the benefits under the scheme are time-bound and contingent upon complete tax payment and procedural compliance. With the final date for full tax payment set at 31st March 2025 and application timelines specified thereafter, taxpayers need to assess their litigation status, evaluate their liabilities, and decide the best course of action.
In the broader context, the GST Amnesty Scheme 2024 is a testament to the maturing of India’s indirect tax system. It emphasizes reconciliation over confrontation, compliance over compulsion, and resolution over prolonged litigation. For eligible taxpayers, this scheme presents a timely opportunity to reset their GST compliance history, mitigate risks, and move forward with a cleaner tax slate in the evolving GST landscape.